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What Are the Experts Predicting for Property Prices in 2012?
It's the New Year and price predictions for 2012 show property in London faring the best while the rest of the country is expected to suffer price falls. Unsurprisingly the North is expected to suffer the worst price falls as these areas are more likely to be dependent upon the public sector for employment. Knight Frank is predicting prices could fall by up to 6% in northern England and Scotland, while property prices in London could rise by up to 5% during 2012. Savills predictions are a little more favourable, showing price falls of up to 4% for property outside London and price increases of 3% for prime property in London. However it does point out that buyer and seller levels are now at a 40 year low and this figure could worsen.
With interest rates remaining low many owners are choosing to hold onto their properties rather than sell at a price they perceive as being below market value. Over the last 40 years house prices have outpaced inflation by around 2.5% annually, but with inflation now running at around 5% these increases cannot be sustained and average house prices now stand at 2003 levels. Looking ahead to 2013 the outlook seems much brighter with both Savills and Knight Frank predicting modest increases in average prices, and by 2016 the prediction is that much of the Midlands and the South will see price increases of up to 6.5%.